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22
Jun
2015
Arkansas farms stressed by low prices
Author: Archie Flanders, Extension Economist

Capital intensive agriculture is characterized by large dollar values for expenses and returns, but the returns for the investment as determined by the return on assets is only moderate. Without payments from PLC and ARC during periods of commodity prices significantly less than equilibrium prices, farm failures would have ripple effects leading to failures of input suppliers and other businesses dependent on farm income. Extension economists at the June 15-17 Southern Extension Economics Committee meeting discussed the 2015 production year for U.S. agriculture. A model farm for Arkansas rice and soybean production in the presentation “Farm Financial Management Analysis with Crop Enterprise Budgets” has net income of -$5,667 for 2015. Without receipts of PLC and ARC payments, losses would total $184,309 for the production year. A compounding factor for farmers is that they will not receive PLC and ARC payments until late 2016. Thus, farmers will have outstanding debts for the current crop year at a time when they are seeking loans for the next production year. The complete presentation is available at Farm Financial Management Analysis with Crop Enterprise Budgets.


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